Guidelines for Best Practice for Managing Information Transfer at the Time of Asset Sales

Transcription

1 Guidelines for Best Practice for Managing Information Transfer at the Time of Asset Sales Published by UKOOA Release 1.0 August 2006 Voluntary Guidelines for Best Practices for managing the transfer of information at the time of the sale and purchase of equity and producing assets on the UKCS

2 Contents 1. Introduction Purpose Principles of the Guidelines Scope of the Guidelines Feedback on the Guidelines The Asset Sale Business Process a Frame of Reference Overview Stage 1: Sale Preparation and Data Room Stage 2: Bidding and Negotiation Stage 3: Sale Completion Stage 4: Post-Sale Information Transfer Information Selection and Associated Issues Spatial Definition of the Asset Defining the Objects Associated with the Licence Area Information Types Included with the Sale Information Types Excluded from the Sale Media and Formats Catalogues of Information Information Rights Missing and Poor Quality Information Obligations to the DTI Managing the Transfer Process Planning the Transfer of Information Close-Out of Information Transfer Liability for Costs Appendices: A Contextual Framework for the Guidelines B Licence Area & Objects List C Information Checklist D Checklist of Costs E Glossary of Terms and Abbreviations Used Whilst every effort has been made to ensure the accuracy of the information contained in this publication, neither UKOOA, nor any of its members, will assume liability for any use made thereof. These guidelines set out what is generally regarded in industry as good practice. and although their use is advocated, they are not mandatory. Copyright 2006 UK Offshore Operators Association

3 1. Introduction 1) These Guidelines have been developed through a consultation process involving representatives from UKOOA, UKOOA members, CDA, CDA Members and the DTI. 2) This is the first published release of the Guidelines and it is important that UKOOA receives feedback from experiences in its use (see Section 5 below). 3) These Guidelines are published in PDF format but are available on request from CDA in MicroSoft Word format to allow the forms in the appendices to be modified for particular use. 4) A List of Abbreviations and a Glossary of Terms Used are provided for convenience. Terms explained in the glossary are shown in bold type. 2. Purpose 1) The Guidelines set out a generic framework (Section 6) for the sale and purchase of assets as context for information management events and actions. 2) The Guidelines are intended for sellers and buyers alike and offer a common framework for sound and cost-effective information management practices. 3. Principles of the Guidelines 1) Both parties (the seller and the buyer) should work together in good faith and in an inter-disciplinary way to reduce the total effort, time and costs involved in identifying, preparing and transferring the information associated with asset sales and to safeguard both parties regulatory and statutory obligations, as appropriate. 2) Both parties are made aware of the Commercial Code of Practice under which it has been agreed that commercial negotiations should be conducted to promote cooperative value generation. 4. Scope of the Guidelines 1) These Guidelines are designed principally for transactions involving the sale and purchase of UKCS assets which involve a Licence Assignment. 2) These Guidelines are particularly relevant to transactions in which operatorship changes hands. It is generally the operator that assumes (non-exclusive) responsibility for the retention and management of the key collections of information for an asset when the identity of the operator changes then provision for transfer of this key information becomes most critical. 3) Appendix C: Information Checklist lists the generic types of information included in the scope of these Guidelines. Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

4 5. Feedback on the Guidelines 1) The relevance of these Guidelines, and their continuous improvement, depends upon feedback on their use from the experiences of sellers and buyers (both positive and negative). 2) Some categories for users comments and observations have been provided below: a) Are the Guidelines clear or are some areas vague, ambiguous or contradictory? b) Has the generalised sale and purchase transaction been correctly represented? c) What are the principal strengths of the Guidelines and their greatest value to you? d) What are the main weaknesses of the Guidelines? e) For which type of asset sale do you believe the Guidelines to be most effective and relevant (for example: producing assets; sales involving change of operatorship; older assets). f) For which type of asset sale do you believe the Guidelines to be the least effective? g) Do the Guidelines help you to understand better your obligations (whether as seller or buyer) to the DTI with respect to Licence Data? If so, what benefits do you see for your company? h) In what ways does the compilation of a List of Objects (Appendix B) help or hinder (or perhaps help and hinder) the sale process from the perspective of: (1) the seller; and (2) the buyer? i) How practical is the process outlined in Appendix A? How could it be improved? j) What are your experiences (whether as seller or buyer) of using the Information Checklist (Appendix C)? Is it useful? What level of detail do you believe is most relevant? k) How (in general) could the Guidelines be improved? l) On balance, do the Guidelines have a net positive or negative effect on the efficiency of the overall asset sale process in your company? 3) Comments (in confidence if requested) may be sent at any time by to CDA and will be most gratefully received. Queries may be addressed to the same person. 4) The Guidelines will be reviewed (and if appropriate republished) annually via the UKOOA website ( Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

5 6. The Asset Sale Business Process a Frame of Reference 6.1 Overview 1) This section describes a generalised (and simplified) four-stage life cycle of business processes for a typical asset sale as a frame of reference within which the Guidelines are to operate. 2) These four stages are used in Appendix A: Contextual Framework for the Guidelines to describe the information management actions expected of the seller and buyer under the Guidelines. Guidelines Overview Managing Information Transfer at the time of Asset Sales Decision to sell Close Data Room Sign SPA Complete Close Sale Process Sale Preparation & Data Room Bidding and Negotiation Sale Completion Post-Sale Data Transfer Seller s Activities Establish clear spatial definition Identify all associated objects Prepare data for Data Room Complete Information Checklist Draft information transfer plan and identify any issues Resolve anomalies or discrepancies (objects & checklists) Negotiate and agree issues Negotiate any rights to information the seller wishes to retain Negotiate division of costs between the parties (using checklist) Agree close-out procedures Implement the transfer plan as set out in the SPA Respond to follow-up enquiries Buyer s Activities Implement the transfer plan as set out in the SPA Periodic follow-up requests 6.2 Stage 1: Sale Preparation and Data Room 1) Sale preparation is initiated by a decision to sell or to explore the possibility of the sale of an asset. 2) Sale preparation should include a review of the associated Objects (wells, seismic surveys etc see Section 7.2). This work is frequently a pre-requisite for the establishment of a Data Room. 3) The seller (or the seller s agent) will often create an Information Memorandum to market the asset. 4) The seller will usually prepare a Data Room (which may be real and/or virtual and which may include physical and/or digital information). 5) The seller may need to review any requirement first to obtain consent (from coventurers or third parties) to disclose information to a potential buyer. Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

6 6) The seller will require potential buyers to execute a Confidentiality Agreement prior to providing a copy of the Information Memorandum or permitting access to the Data Room. 7) The seller may host Q&A sessions and various Management Presentations to prospective buyers and these may include the provision of additional information in various forms. 8) The Data Room remains open for a given period of time. 6.3 Stage 2: Bidding and Negotiation 1) The seller will receive and review bids from interested buyers for a given period after the Data Room has closed. 2) Procedures vary, but a selected bid would tend to crystallize after an initial period of bid clarification. 3) A draft Sale and Purchase Agreement (SPA) is usually supplied by the seller and would generally be supported by the seller s procedures for offer. 4) The parties may proceed directly to a SPA or the initial sale terms may first be agreed and recorded in a Heads of Agreement, a Memorandum of Understanding or in a non-binding proposal letter. Less formal methods may include simple verbal agreement, a handshake or an . 5) The SPA is negotiated, agreed and signed (executed). Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

7 6.4 Stage 3: Sale Completion 1) There is a period between the signature of the SPA and the actual legal date on which the asset changes hands (the Completion Date) (although in some cases, the second can follow immediately from the first). 2) The SPA includes a reference to an Effective Date (a date typically falling before the SPA signature date). During the period between the Effective Date and the Completion Date the seller is required to notify the buyer of any material changes in relation to the asset being sold. During this period too, the seller passes crucial operational information to the buyer. 3) The seller gives notice of the sale transaction to its co-venturers to obtain the consents required under the Joint Operating Agreement. 4) During this period, completion documentation is prepared by the seller and is circulated for approval to the buyer and to other parties including existing licensees and the DTI. 5) During this period the buyer will conclude the due diligence process (which involves validating the financial, operational and other statements made by the seller with respect to the asset being sold) and which will not conclude until all the Conditions Precedent are met and the deal is completed. 6) It is usually during this period, once all Conditions Precedent have been met, that the consideration (payment) is effected by the buyer to the seller (however the arrangements for the timing of the payment vary considerably and may include postcompletion adjustments, staged payments and a variety of other negotiated settlements). 7) The completion documentation usually comprises an Execution Deed (in accordance with the Master Deed dated ) and any other documentation required to effect the formal transfer of the asset (e.g. transfer of operatorship agreement and the trust deed). 6.5 Stage 4: Post-Sale Information Transfer The execution of completion documentation triggers a series of events. 1) Certified copies of the sale documentation are circulated to the relevant parties. 2) DTI is informed of completion as are other tasks required to be done by law, regulation, code of conduct, under the SPA, etc. 3) Information data transfer is arranged and undertaken. Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

8 7. Information Selection and Associated Issues This section describes the recommended approach to be taken by the seller (and in some cases the buyer) to determine what information is relevant to the asset being sold and to identify any possible associated issues. 7.1 Spatial Definition of the Asset 1) The seller should provide a map at the appropriate scale showing the boundaries of the asset being sold. 2) The seller should provide a set of co-ordinates (specifying the applicable datum and projection) that identify the boundary of the polygon (or polygons) bounding the asset. 3) The spatial description of the asset interest being sold must correspond to a recognised Licence Area (a unique production or exploration licence, a licence block, part-block, sub-area or a field determination boundary). It is not sufficient for example simply to identify the asset by a field name since there may be some ambiguity as to the spatial extent of the field. 4) Since many obligations to the DTI are attached to a specific Licence Area, it is crucial that the area is correctly and accurately identified. 7.2 Defining the Objects Associated with the Licence Area 1) The seller should provide a list of the following Objects that belong directly to the asset/licence Area being sold: a) Wells b) Seismic Surveys c) Surface and sub-sea Infrastructure d) Other Objects 2) The seller should discriminate very clearly between those Objects for which information will: a) only be available for viewing (in a Data Room for example); b) the buyer can expect would be transferred with the sale; and c) the buyer would not be entitled to receive. 3) The seller should provide sufficient details for each of the Objects listed (including geographic co-ordinates) to enable them to be identified unambiguously. 4) Appendix B: Objects List suggests the minimum attributes of wells, seismic surveys and other Objects that should be provided by the seller. 5) The seller must remember that a well is not necessarily related to the Licence Area simply because it is spatially located within the Licence Area. Any wells drilled under an older licence which happens to underlie the Licence Area in question are associated with that older licence and would be excluded from the sale (since neither rights nor obligations would apply to the seller). Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

9 6) Whilst it is reasonably straightforward to establish which wells are associated with the Licence Area this unfortunately is generally not the case for seismic surveys. Practically, the seller must above all establish that it does indeed own the surveys to be included in the asset sale (see Section 7.7 for guidance on this) and then must ensure that the transfer of the ownership of such surveys (and by implication, the obligations for the preservation and release of such surveys) is recorded in DEAL as having been passed to the buyer Information Types Included with the Sale The parties should agree the broad scope of the information that will be associated with the sale by completing a copy of Appendix C: Information Checklist. 7.4 Information Types Excluded from the Sale The seller should advise the buyer (through Appendix C: Information Checklist) of any significant information that would be excluded from the sale. 7.5 Media and Formats 1) For the significant information types (for example seismic tapes) the parties should agree medium standards in which the information will be made available to the buyer (using Appendix B as a checklist). 2) The parties will agree on the file formats of significant digital information types (using Appendix B as a checklist). 3) The use of CDA is a very efficient mechanism for the transfer of well reports and logs since it removes media and formats as an issue (refer also to paragraph 4a in Section 8.1). 7.6 Catalogues of Information 1) It may not always be practical for the seller to provide a complete catalogue of the information being passed across with the sale however the seller must advise the buyer of the extent and quality of the catalogues available. 2) The parties will agree on the extent and format of the catalogue information to be made available with the information passing with the sale. 7.7 Information Rights 1) The continuing rights to the information passed with the sale (if any) should be agreed between the parties within the terms of the SPA. 2) It is recommended that seller establish clear provenance for all and any information to be included with the sale and notify the buyer in advance of any rights held by third parties to any information (this matter is usually covered by warranty and indemnity provisions in the SPA). 3) By way of example, the provenance of seismic data may include one (or more) of the following methods of acquisition by the seller: 1 A process whereby survey (and well) ownership can be transferred will be put in place (with the DTI s endorsement) in DEAL in Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

10 a) directly, as an operator or co-venturer in a production licence b) directly, under an exploration licence c) as courtesy data from another licensee d) under licence as spec data from a seismic contractor e) under licence from another licensee via the UKOOA/DTI Seismic Data Release Guidelines f) from another licensee as part of a seismic trade/exchange g) as part of a Group Shoot h) by other or unknown means 4) The picture for other data types can be similarly complex and the parties must be absolutely clear that the seller either has the right or subsequently obtains the right to pass data with the sale without breaching any third party IPR. 7.8 Missing and Poor Quality Information 1) It is inevitable in many cases that the seller will be unable to locate information which ought to be passed to the buyer at the time of sale. 2) Similarly, some information will prove to be of poor quality, perhaps even to the extent that it is unusable. 3) It is recommended that both parties agree on how such eventualities will be addressed, including the following specific undertakings: a) an undertaking by the seller that it will use its reasonable endeavours to trace any missing or poor quality information from other sources (affiliates and coventurers for example). b) an undertaking by the seller that it will pass to the buyer any relevant information which comes to light, post-sale. c) an undertaking from the buyer that it will return any information received in error with the sale. 4) No formal arrangement exists whereby a licensee can advise the DTI that it is unable to meet its obligations with respect to Licence Data owing to the data being missing. However the following approach has been discussed with DTI representatives and has been accepted in principle. It is provided here for guidance purposes: a) The seller will identify (all) previous asset (licence) owners (UKOOA and DTI can help trace these companies if necessary). b) Previous licensees will be requested by the seller to use reasonable endeavours to locate the data concerned. If necessary, the request to previous licensees can be escalated through the DTI (and possibly through UKOOA). c) Other possible sources of the missing data will also be explored by the seller (with UKOOA, CDA and DTI help, on request), including: (1) the DTI (Gilmerton hardcopy collection); (2) the DTI s Data Release Agents; (3) well and seismic trade partners; and (4) the UKOOA and CDA member community at large. If found, these parties will be asked to agree to pass (a copy of) the missing data to the seller (or the buyer, as appropriate). d) If all attempts to locate the missing data fail, then after a reasonable time, the data will be deemed permanently lost and the DTI will acknowledge this fact (ideally in writing) but the seller (and buyer) will agree to keep a watching brief in case the missing data resurfaces at some point in the future. Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

11 7.9 Obligations to the DTI 1) It is recommended that both parties arrive at a clear understanding of any obligations to the DTI with respect to the retention and provision of information attached to the asset being sold. 2) Equally, both parties need to be clear about the extent to which such obligations pass to the buyer or remain with the seller in connection with the sale. The key obligations to the DTI 2 which will pass from the seller to the buyer with the asset sale include: a) The retention (in perpetuity) of all Licence Data associated with the asset. b) The retention (for the prescribed period) of Samples associated with the asset. c) The provision to the DTI of Licence Data and Samples associated with the asset. d) The provision of catalogues to DEAL for the Licence Data associated with the asset (as described from time to time in PON9). e) The maintenance of DEAL well and seismic survey headers for those Objects associated with the asset (in accordance with PON9). f) The provision of Licence Data to the DTI Release Agents for the purpose of publication ( release ) (or the submission to the CDA Well DataStore for this purpose). g) The publication ( release ) of release-age seismic data under the DTI/UKOOA Seismic Data Release Guidelines. h) Compliance with any relevant aspects of the Infrastructure Code of Practice ( ICOP ) for those infrastructure Objects associated with the asset. i) Compliance (where appropriate) with the Fallow Process and various other industry processes and initiatives, whether mandatory or voluntary in nature. 3) The seller and the buyer must be clear as to whether any obligations to the DTI for wells or seismic surveys associated with relinquished parts of the Licence Area remain with the seller or are passed to the buyer. It is difficult to state a general rule for such cases since much depends on precisely what Licence Area is being sold implicitly (or explicitly) with the asset(s) in question. 4) The SPA (or processes and procedures set out in the SPA) should identify where licence obligations to the DTI lie with respect to any information that is not passed to the buyer either because it is overlooked, unavailable or lost (see also Section 7.8 above). 5) These Guidelines recommend that the seller and the purchaser jointly advise the administrators of the DEAL website (ukdeal.co.uk) of the Objects being passed from the seller to the buyer with the transaction. This can be achieved by providing a copy of Appendix B to the BGS (contact details are available on the DEAL website) together with: (a) details of the parties involved; and (b) the Effective Date of the transfer. 2 This is not an exhaustive list. See CDA, Framework of UKCS Licensing (Section 16, Licence Data Obligations and Rights) (2006) for more detail. (Available from CDA on request.) Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

12 8. Managing the Transfer Process 8.1 Planning the Transfer of Information 1) It is acknowledged that there are sensitivities and matters of commercial confidence involved in the sale and purchase of most assets. It is recommended however that both parties involve their respective information management specialists in the planning aspects of the transaction at the earliest opportunity. 2) As soon as possible, the parties should agree a prioritized programme of information transfer and should work together to identify any issues to be resolved (using Section 7 for guidance). 3) The scope of the discussions between the seller and buyer should include the negotiation and agreement of the following matters: a) agreement and a mutual understanding of the Licence Area in question and the Objects that pertain b) any significant media and format issues c) the extent to which information catalogues will be made available and their form d) transfer of access rights in lieu of physical transfer e) checking procedures and party roles f) procedures for dealing with missing and poor quality information g) any regulatory matters that relating to the information that may arise from the DTI and the steps to address them h) any continuing rights the seller wishes to retain in any of the information being transferred i) the division of costs associated with the transfer of information between the parties (see Section 8.3 below) 4) The parties need to recognize any situations where there will not be a physical transfer of information but instead access rights (or entitlement) will be transferred from the seller to the buyer : a) Transfer of digital well information may be effected via the CDA DataStore but procedures for completeness checking and change of ownership need to be followed and should recognize the implications of either the seller or the buyer not being a CDA member. b) Many companies store their Samples offsite with a commercial provider. Regardless of whether or not there is a physical transfer of this material from the seller to the buyer, both parties should agree between themselves and with the storage provider on the list of the material related to the sale. Both parties also need to ensure that the correct commercial agreements are in place between the buyer and the receiving storage provider and that the timing of the transaction is agreed with all parties concerned. 8.2 Close-Out of Information Transfer 1) The onus is on the buyer to check that all agreed information is passed across with the sale. It is therefore in the interest of the buyer to negotiate into the SPA any provisions it sees fit in respect of information checking, transfer delays, missing or poor quality information. Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

13 2) The consequences of any discrepancies in the information transferred would be subject to the terms negotiated and agreed in the SPA that is executed. 3) The seller should co-operate with the buyer to agree a formal close-out process to reconcile information received by the buyer against that expected from the seller as part of the sale (including the form and content of the Transfer Record). 4) The seller and buyer should agree terms under which the seller will be required to respond to any follow-up enquiries from the buyer for a specified period of time, post the close-out date. 5) The buyer and the seller should agree a Transfer Record, listing the information that was actually transferred and noting any material discrepancies. 8.3 Liability for Costs 1) It is not the intention of these Guidelines to stipulate where liability for costs resides this is a matter for the SPA however the Guidelines do urge the parties to agree on their allocation as early in the process as possible. 2) Appendix D: Checklist of Costs may be used for negotiation and agreement on material items of cost (such as tape copy/reformat and commercial storage expenses). Guidelines for Best Practice Release 1.0 Managing Information Transfer at the Time of Asset Sales

14 Appendix A: Contextual Framework for the Guidelines This appendix brings together Sections 6, 7 and 8 into a single frame of reference. Business Process Seller Buyer Comment Stage 1: Sale Preparation and Data Room 1) Establish a clear spatial definition of the asset (a set of co-ordinates identifying the polygon boundary) and the Licence Area (or areas) it represents 2) List (unambiguously) the Objects (wells, seismic surveys, infrastructure etc) associated with the asset considered for sale 3) Complete Appendix B: Objects List and make available to potential buyers in the Data Room 4) Complete Appendix C: Information Checklist Stage 2: Bidding and Negotiation 5) Assemble information for the Data Room; including copies of Appendix B: Objects List and Appendix C: Information Checklist 1) Work with the buyer to resolve any anomalies or discrepancies in Appendix B: Objects List and Appendix C: Information Checklist Review Appendix C: Information Checklist in the context of Appendix B: Objects List and resolve any issues and anomalies with the seller. 2) Negotiate and agree the following other matters with the buyer: any significant media and format issues the extent to which information catalogues will be made available and their form transfer of access rights in lieu of physical transfer checking procedures and party roles procedures for dealing with missing and poor quality information The Data Room will include all information which the seller believes is necessary to show the asset to its best advantage. The seller must however make it very clear to prospective buyers which Licence Area is for sale and which Objects (wells, seismic surveys, infrastructure etc) actually belong to the asset and any others provided only for contextual purposes. Nor can it be assumed that the seller is able to pass all information for Object with the sale (there may for example be reports on wells which belong to the asset but for which IPR is held by third parties). Discriminating between the information in this way is not always simple, but this exercise will simplify the actual sale and will mitigate the risk of charges of breach of IPR and licence. The buyer and seller need to arrive at a common understanding of what Objects belong to the asset in question and what information types will be transferred with the sale. This process will flush out any anomalies and inconsistencies for early resolution. Constructive dialogue will help both parties reach agreement on some practical and procedural matters and to budget appropriately for relevant time and cost elements. For example, cores and Samples held in commercial storage may not need to physically move (this is expensive) but could simply be transferred by the seller to an account in the name of the buyer. Appendix A: Contextual Framework for the Guidelines Page: A.1

15 Business Process Seller Buyer Comment 3) Identify and agree the position on any regulatory matters relating to the information which may arise from the DTI and the steps to address them The matter of Licence Data obligations to the DTI can be raised and resolved as a discrete matter. 4) Negotiate any continuing rights the seller wishes to retain in any of the information being transferred. Some sellers wish to retain a licence to use certain information whose title is transferred with the sale. This would be the appropriate time to raise and conclude such matters. Stage 3: Sale Completion Stage 4: Post-Sale Information Transfer 5) Advise the buyer of any third party rights in any of the data to be transferred and for which the buyer needs to make separate third party arrangements (e.g. spec seismic data) Work with the seller to recognize and resolve any third party rights in any of the data to be transferred and make separate third party arrangements as appropriate (e.g. spec seismic data). 6) Negotiate and agree the division of costs associated with the transfer of information between the parties by reference to Appendix D: Checklist of Costs 7) Negotiate and agree information transfer close-out procedures with the buyer (including the form and content of the Transfer Record). 8) Agree a prioritized programme of information transfer and identify any issues involved. 1) All predicable issues relating to the information to be transferred have been discussed and agreed. 2) Advise DEAL of the asset sold and of the Objects attached. 1) Work with the other party s nominated IM specialist to implement the agreed programme of information transfer within the terms set out in the SPA 1) Respond to information follow-up enquiries from the buyer for an agreed period after the close-out date. Request clarification from the seller about the information associated with the sale, for an agreed period after the close-out date. It is important that any third party rights are recognised in any data that the buyer wishes to continue to use after the sale. These matters are often complicated but must be resolved early on if later (IPR) problems are to be avoided. Although not necessarily material in the context of the asset sale itself, the cost for example of transcribing digital tapes and of transferring core material can be very significant and liabilities should be understood and agreed before the sale is concluded. Formal close out procedures are required to record what information has been passed (as opposed to what information was expected). Early agreement on close-out procedures will help avoid misunderstandings later on. Planning between Information managers from both sides should start at the earliest possible point in the process and will help achieve an efficient transfer. Appendix A: Contextual Framework for the Guidelines Page: A.2

16 Appendix B: Licence Area & Objects List (For illustration purposes only) LICENCE AREA Table B.1 Licence Block or Sub-area Name (if relevant) Start Date Licence Area Operator Remarks Number Part-Block P /14a 22/14a Rest of Block Excluding Everest 21 Nov 1997 Amerada Hess Limited Illustration only WELLS BELONGING TO THE ASSET Table B.2 Well Number (PON12 format) Well Number Alias Spud Date Completion Date Well Owner Well Status Fallow Status Appendix B: Licence Area & Objects List Page: B.1

17 SEISMIC SURVEYS BELONGING TO THE ASSET Table B.3 (The surveys listed must not include any for which the IPR is not held by the seller) Survey Name Survey Name Alias Survey Name (CS9) Type (2D/3D) Acquisition Contractor Name Year Shot Current Survey Owner Area of Survey (Area, Quad(s) or Block(s) INFRASTRUCTURE BELONGING TO THE ASSET Table B.4 Type Name Description Communications Comms. Line 23 Fibre trunking Illustration only Further discussion between the parties will be required to make this table useful and relevant Appendix B: Licence Area & Objects List Page: B.2

18 Appendix C: Information Checklist (Preliminary version, for illustration purposes only) This appendix provides a generic checklist of the information types that will be included or excluded from the sale. The checklist is not intended to be a catalogue of the information items to be transferred but simply a reference list of possible information types which could be pertinent to a sale. It is recommended that the tables below be converted to Excel Spreadsheets for actual use. Obviously, the parties are at liberty to modify the table content in any way they wish the tables are provided here for illustrative purposes only. It is for the seller and the buyer to decide whether they wish to use the Information Checklist. If they agree to use it, they may do so at several optional levels, for example: a) Table C.0 only and to ignore the more detailed tables C.1 to C.8 b) Some or all of the detailed tables but may restrict their use to the Data Group level (column 1) only. c) The detailed tables may be used either as checklists for each asset (or class of Object) or as a generalised aggregated list representative of all assets or classes of Objects. The following categories have been used (this list itself serves as a higher-level catalogue): INVENTORY OF INFORMATION TYPES & CATALOGUES USED Table C.0 Information Category Table Remarks Contracts & Legal Records C.1 Financial Information C.2 Exploitation Information C.3 HSE Records C.4 Human Resources Records C.5 Production, Operations and Project Information C.6 Seismic Data C.7 Well Data C.8 Appendix C: Information Checklist Page: C.1

19 CONTRACTS & LEGAL RECORDS Table C.1 Data Group Data Set All Assets [Asset 1] [Asset 2] [Asset 3] Contracts & Procurement Prequalification documents Tender documents Purchase & Service Orders Original signed contracts and associated correspondence Legal Correspondence Files Original Agreements JOAs Minutes Lifting and allocations Product sales agreements Transportation Insurance Documentation Certificates Correspondence Appendix C: Information Checklist Page: C.2

20 FINANCIAL INFORMATION Table C.2 Data Group Data Set All Assets [Asset 1] [Asset 2] [Asset 3] Accounts Payable Corporate Finance Corporation Tax Files General Accounting Operations Accounting PRT Files Tax Treasury Files VAT Files Appendix C: Information Checklist Page: C.3

21 EXPLOITATION INFORMATION Table C.3 Data Group Data Set All Assets [Asset 1] [Asset 2] [Asset 3] Reserves Reserves audits Reserves correspondence Reserves annual reports and SEC information Development Field development plans PVT data Production and pressure data (field) PVT data (field) Studies Geochemical Studies & Reports Reservoir studies, forecasts and performance reports STOIIP Field STOIIPs Committee Minutes Technical Committee Operating Committee Appendix C: Information Checklist Page: C.4

22 HSE INFORMATION Table C.4 Data Group Data Set All Assets [Asset 1] [Asset 2] [Asset 3] Accident s Accident Reports Accident register Audit Reports Policies Safety Files Environmental Files Risk Assessments Safety Standards Manuals Procedures Oil in Water records EU ETS Forms SEPA Hazardous Waste Consignments & Transfer Records EEMS Returns Overboard Sand/Scale Discharges COSHH Assessments Appendix C: Information Checklist Page: C.5

23 HUMAN RESOURCES INFORMATION Table C.5 Data Group Data Set All Assets [Asset 1] [Asset 2] [Asset 3] Employee Files Appraisals Training records References Medical Records Compensation & Benefits Contracts of Employment Disciplinary Matters Pension Scheme Benefit Files Payroll records Annual Leave Records Sickness Absence records Appendix C: Information Checklist Page: C.6

24 PRODUCTION & OPERATIONS INFORMATION Table C.6 Data Group Data Set All Assets [Asset 1] [Asset 2] [Asset 3] Operations Anomaly/Corrosion Reports As-built Records Certification Chemical Information Daily Operations Reports Design and Vendor Dossiers Inspection Isometrics Inspection records Inventories/Stock Lists Material release Notes Modification/Change Requests Offshore Work permits Passenger Lists (POB) Pipeline Survey Records Process Optimization Records Risk Assessments Shipping Manifests Temporary Repair Register Production Vessel Files Annual Field Reports Budget & Life of Field Studies Correspondence Files Production and Pressure Data Production Engineering Final Reports Production Flow Rates Sand Control/Strength Data Appendix C: Information Checklist Page: C.7

25 SEISMIC DATA BY SURVEY (check box if data type is expected to be included or if to be specifically excluded from the data transfer) Table C.7 Data Group Data Set Survey Name (CS-9) All Surveys [Survey 1] [Survey 2] [Survey 3] Field Data Raw Trace Data Raw Navigation Data Navigation Data (Formatted Positions) Observers Seismic Log Acquisition Report Observers Navigation Log Seismic QC Report Navigation QC Report Navigation Report Navigation Base Map Bathymetry Gravity Magnetic Stack Raw Seismic Trace Final Seismic Trace Stack Velocities Migration Raw Seismic Trace Final Seismic Trace Processing Report Migration Velocities Appendix C: Information Checklist Page: C.8

26 WELL DATA BY WELL (check box if data type is expected to be included or if to be specifically excluded from the data transfer) Table C.8 Data Group Data Set Well Name All Wells [Well 1] [Well 2] [Well 3] [Well 4] [Well 5] [Well 6] [Well 7] [Well 8] [Well 9] Well Samples Conventional cores Core plugs, chips and sidewall Ditch Cuttings (unwashed) Ditch Cuttings (washed & dried) Oil, fluid or gas samples Pressurised samples Slides Other Well Reports Pre-drilling Reports Drilling Reports Core Reports & Descriptions Engineering Reports Geological Reports Geophysical Well Reports Test Reports Completion Report Other Single-Well Reports Well Logs Acoustic/Sonic/Velocity Biostratigraphic Caliper Composite/Completion Density Inclinometry Lithological/Mud log Natural Gamma Ray Neutron Nuclear Magnetic Resonance Resistivity Spontaneous Potential Temperature Other Logs Appendix C: Information Checklist Page: C.9

27 Appendix D: Checklist of Costs (Preliminary version, for illustration purposes only) The table below is a generic checklist to assist with allocating the costs of information transfer between the buyer and the seller. The parties may find it easier to convert the table into an Excel spreadsheet Element of Cost CDA Annual Well Fees Commercial storage costs Tape Transcription costs Liability Seller Buyer Effective Date Comments Appendix D: Checklist of Costs Page: D.1

28 Appendix E: Glossary of Terms and Abbreviations Used BGS British Geological Survey (operate the ukdeal.co.uk website on behalf of CDA and UKOOA) CDA Common Data Access Limited (a UKOOA subsidiary) (website: cdal.com) Commercial Code of Practice refers to the UK Continental Shelf Oil and gas Industry Licence-holder Commercial Code of Practice (Follow link: Commercial Code of Practice) Completion Date means the date on which all the paperwork is signed/executed that actually effects the transfer of legal and beneficial interests/ownership rights. Conditions Precedent are those conditions which must be met before Completion Date. CP see Conditions Precedent Data Room means either a physical location or a virtual site in which information related to the asset for sale is made available in confidence to prospective buyers). DEAL website operated by the BGS on behalf of CDA and UKOOA (website: ukdeal.co.uk). Due Diligence the process by which the buyer investigates the records of the seller to support its value of the asset being purchased through the SPA. Economic Date see Effective Date Effective Date (sometimes called the Economic Date) is the date from which stipulated legal and beneficial interests/ownership rights are valid (or effective ). Execution Deed means the First Annex to Schedule 2 of the Master Deed or an alternative document substantially in the same form. Heads of Agreement means an outline of the principal non-standard terms to be included in the SPA. Information refers to information, data, documents and records; whether physical (e.g. cores, samples, paper, film) or digital (whether held on media or within computer networks or similar). Information Memorandum means a document detailing the asset(s) for sale and related statutory information IPR see Intellectual Property Rights Intellectual Property Rights the rights attached to a product of the intellect that has commercial value, including copyrighted property such as literary or artistic works, and ideas, such as patents, business methods and processes. Licence Assignment refers to the consent required from the Secretary of State for any transfer of licence interest (in compliance with the Model clauses attached to each licence). (Follow link: Assignment ) Appendix E: Glossary of Terms and Abbreviations Page: E.1

29 Licence Area a description of the area (which either is the asset being sold or in which the asset falls) expressed in terms of a unique production or exploration licence, a licence block, part-block, sub-area or a field determination boundary. Licence Data the information about the geology of the licensed area which (under the terms of the Petroleum Act 1998, and the licences granted thereunder) licensees are obliged to hold. Master Deed means the deed developed by UKOOA, the DTI. and a number of other interested organisations to expedite the transfer of UKCS offshore licence interests and other agreements relating to associated assets and infrastructure. (Follow link: Master Deed) Memorandum of Understanding means an informal record, document, or instrument that serves as the basis of a future contract. Object means a feature such as a well, seismic survey or piece of infrastructure which is associated with the asset being sold and to which Information pertains. Samples include well cores and cuttings, portions of sea bed samples and/or cores from boreholes penetrating below the sea bed. SPA Sale and Purchase Agreement Sale and Purchase Agreement means the legal agreement between the seller and the buyer for the sale and purchase of an asset or assets. Transfer Record is the formal record of the information passed from the seller to the buyer in association with the sale, including any material discrepancies (e.g. missing or poor quality information). UKOOA United Kingdom Offshore Operators Association UKOOA Exploration MRT refers to the Membership Representation Team within UKOOA concerned with exploration matters and chaired by the UKOOA Operations Director. Appendix E: Glossary of Terms and Abbreviations Page: E.2